What changed
RBI clarified that crediting FD interest to a savings account per customer mandate counts as a customer-induced transaction. Such savings accounts stay operative as long as these credits occur. They become inoperative only after two years from the date of the last interest credit entry.
What it means for you
UCBs must not classify savings accounts as inoperative solely because the only activity is FD interest credits per mandate. This preserves account status and avoids premature reporting as unclaimed deposits. Banks need to track the date of the last interest credit to correctly apply the two-year inoperative clock.
What you must do
- Review savings accounts where the only transaction is FD interest credits per customer mandate and ensure they are not marked inoperative.
- Update your system to treat such interest credits as customer-induced transactions for inoperative account classification.
- Set a two-year countdown from the date of the last FD interest credit before marking such accounts as inoperative.
- Train staff on this clarification to avoid misclassification and regulatory non-compliance.
Who it affects
Primary (Urban) Co-operative Banks, UCB operations and compliance teams, UCB deposit account holders with linked FD interest mandates
What counts as a customer-induced transaction for inoperative account classification?
Any debit or credit transaction initiated by the customer or at their instance, including a mandate to credit FD interest to a savings account, is customer-induced.
When does a savings account with only FD interest credits become inoperative?
It becomes inoperative two years after the last credit entry of FD interest. As long as interest is credited periodically, the account remains operative.